BRAUNHAGEY BORDEN LLP San Francisco, CA 94104 Telephone ... · Date: December 18, 2017 Time: UNDER SUBMISSION Matthew Borden, Esq. (SBN: 214323) [email protected] Amit Rana, Esq

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Case No. 5:17-cv-01832-TJH-KK

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

SUMMER SANDOVAL, individually, and on behalf of all others similarly situated, Plaintiff, v. YUMMYEARTH INC. and DOES 1-25, inclusive, Defendant(s).

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Case No. 5:17-cv-01832-TJH-KK MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT YUMMYEARTH INC.’S MOTION TO DISMISS WITH PREJUDICE PURSUANT TO RULE 12(b)(1) OR, IN THE ALTERNATIVE, FOR JUDGMENT ON THE PLEADINGS PURSUANT TO RULE 12(c) Judge: Hon. Terry J. Hatter Jr. Date: December 18, 2017 Time: UNDER SUBMISSION

Matthew Borden, Esq. (SBN: 214323) [email protected] Amit Rana, Esq. (SBN: 291912)

[email protected] BRAUNHAGEY & BORDEN LLP 220 Sansome Street, Second Floor San Francisco, CA 94104 Telephone: (415) 599-0210 Facsimile: (415) 276-1808 ATTORNEYS FOR DEFENDANT YummyEarth Inc.

Case 5:17-cv-01832-TJH-KK Document 8-1 Filed 11/17/17 Page 1 of 22 Page ID #:117

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i Case No. 5:17-cv-01832-TJH-KK MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT’S MOTION TO DISMISS OR JUDGMENT ON THE

PLEADINGS

TABLE OF CONTENTS

INTRODUCTION ..................................................................................................... 1

FACTS ....................................................................................................................... 3

A. YummyEarth’s Candy ........................................................................... 3

B. Procedural History ................................................................................ 4

C. Plaintiff’s Allegations ........................................................................... 4

ARGUMENT ............................................................................................................. 5

I. PLAINTIFF LACKS STANDING TO BRING THE CLAIMS .................... 6

A. Plaintiff Has Not Suffered Any Injury .................................................. 7

B. Plaintiff Lacks Standing for Injunctive Relief ...................................... 9

II. PLAINTIFF’S CLAIMS ARE IMPLAUSIBLE ........................................... 11

A. Plaintiff Has Not Plausibly Alleged that She Was Misled ................. 12

B. Plaintiff Has Not Plausibly Alleged Reliance ..................................... 14

C. The Accused Labels Expressly State that the Product Contains Sugar .................................................................................... 15

D. Plaintiff Has Not Plausibly Pleaded Any Injury ................................. 15

III. PLAINTIFF’S CLAIMS ARE NOT PLED WITH PARTICULARITY ....................................................................................... 16

CONCLUSION ........................................................................................................ 17


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ii Case No. 5:17-cv-01832-TJH-KK MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT’S MOTION TO DISMISS OR JUDGMENT ON THE

PLEADINGS

TABLE OF AUTHORITIES CASES

Ashcroft v. Iqbal, 556 U.S. 662 (2009) ............................................................................................ 6, 12

Bates v. United Parcel Serv., Inc., 511 F.3d 974 (9th Cir. 2007) ......................................................................... 9, 10, 11

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ........................................................................................ 2, 6, 12

Buckland v. Threshold Enters., Ltd., 155 Cal. App. 4th 798 (2007) ........................................................................... passim

Cafasso v. General Dynamics C4 Sys., Inc., 637 F. 3d 1047 (9th Cir. 2011) .............................................................................. 5, 6

Cal. Trout, Inc. v. U.S. Bureau of Reclamation, 115 F. Supp. 3d 1102 (C.D. Cal. 2015) ..................................................................... 3

Cook v. Harding, 190 F. Supp. 3d 921 (C.D Cal. 2016) ........................................................................ 5

Davidson v. Kimberly-Clark Corp., 873 F.3d 1103 (9th Cir. 2017) ........................................................................... 10, 11

Durell v. Sharp Healthcare, 183 Cal. App. 4th 1350 (2010) ................................................................................ 12

Dworkin v. Hustler Magazine Inc., 867 F.2d 1188 (9th Cir.1989) ................................................................................ 5, 6

Ebeid ex rel. U.S. v. Lungwitz, 616 F.3d 993 (9th Cir. 2010) ................................................................................... 16

Figy v. Frito-Lay N. Am. Inc., 67 F. Supp. 3d 1075 (N.D. Cal. 2014) .................................................................... 10

Gasser v. Kiss My Face, LLC, No 17-cv-01675, 2017 WL 4773426 (N.D. Cal. Oct. 23, 2017) ............................ 11

Goldsmith v. Allergan, Inc., No. 09-cv-7088, 2010 WL 11463860 (C.D. Cal. Sept. 14, 2010) ............................ 8


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iii Case No. 5:17-cv-01832-TJH-KK MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT’S MOTION TO DISMISS OR JUDGMENT ON THE

PLEADINGS

Guttmann v. Nissin Foods, Co., Inc., 2015 WL 4881073 (N.D. Cal. Aug. 14, 2015) .............................................. 1, 2, 8, 9

Hairston v. S. Beach Beverage Co., No. 12-cv-1429 JFW, 2012 WL 1893818 (C.D. Cal. May 18, 2012) .................... 15

In re ConAgra, 90 F. Supp. 3d 919 (C.D. Cal.) ................................................................................ 16

In re Tobacco II Cases, 46 Cal. 4th 298 (2009) ............................................................................................. 12

Independent Living Ctr. of S. Cal. v. City of Los Angeles, 205 F. Supp. 3d 1105 (C.D. Cal. 2016) ..................................................................... 6

Kane v. Chobani, Inc., 973 F. Supp. 2d 1120 (N.D. Cal. 2014) ............................................................ 12, 15

Kwikset Corp. v. Superior Ct., 51 Cal. 4th 310 (2011) ............................................................................................. 12

Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) .................................................................................................. 6

McKinnis v. Kellogg USA, No. 07-cv-2611-ABC (RCx), 2007 WL 4766060 (C.D. Cal. Sept. 19, 2007) ....... 14

Morgan v. Wallaby Yogurt Co., Inc., No. 13-cv-00296 WHO, 2013 WL 5514563 (N.D. Cal. Oct. 4, 2013) ................... 15

Nguyen v. Medora, No. 14-cv-00618, 2015 WL 4932836 (N.D. Cal. Aug. 18, 2015) .......................... 10

Pelayo v. Nestle USA, Inc., No. 13-cv-5213-JFW (AJWx), 989 F. Supp. 2d 973 (C.D. Cal. 2013) .................. 13

Red v. Kraft Foods, Inc., No. 10-cv-1028-GW(AGRx), 2012 WL 5504011 (C.D. Cal. Oct. 25, 2012) ........ 13

Romero v. Flowers Bakeries, LLC, No. 14-cv-05189 BLF, 2015 WL 2125004 (N.D. Cal. May 6, 2015) ........ 10, 12, 16

Safe Air for Everyone v. Meyer, 373 F.3d 1035 (9th Cir. 2004) ................................................................................... 5


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iv Case No. 5:17-cv-01832-TJH-KK MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT’S MOTION TO DISMISS OR JUDGMENT ON THE

PLEADINGS

Starbucks Corp. v. Superior Court, 168 Cal. App. 4th 1436, (2008) ................................................................................. 8

Stathakos v. Columbia Sportswear Co., No. 15-cv-04543-YGR, 2017 WL 1957063 (N.D. Cal. May 11, 2017) ................. 14

Victor v. R.C. Bigelow, Inc., No. 13-cv-02976-WHO, 2014 WL 12642194 (N.D. Cal. July 18, 2014) ................ 5

Viggiano v. Hansen Natural Corp., 944 F. Supp. 2d 877 (C.D. Cal. 2013) ....................................................................... 3

Werbel v. Pepsico, Inc., 2010 WL 2673860 (N.D. Cal. July 2, 2010) ..................................................... 13, 14

Williamson v. Apple, Inc., 2012 WL 3835104 (N.D. Cal. Sept. 4, 2012) ......................................................... 13

STATUTES

Cal. Bus. & Prof. Code § 17204 ................................................................................. 12

Cal. Bus. & Prof. Code § 17200 ................................................................................... 5

Cal. Bus. & Prof. Code § 17500 ................................................................................... 5

Cal. Civ. Code § 1780(a) ............................................................................................ 12

Cal. Civ. Code § 1750 ................................................................................................... 5

RULES

Federal Rule of Civil Procedure Rule 12(b) ................................................................. 6

Federal Rule of Civil Procedure Rule 12(b)(1) ................................................... 1, 3, 5

Federal Rule of Civil Procedure Rule 12(b)(6) ............................................................ 5

Federal Rule of Civil Procedure Rule 12(c) ......................................................... 1, 5, 6


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1 Case No. 5:17-cv-01832-TJH-KK MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT’S MOTION TO DISMISS OR JUDGMENT ON THE

PLEADINGS

Defendant YummyEarth Inc. (“YummyEarth”) respectfully submits this

memorandum of law in support of its motion to dismiss this action pursuant to Rule

12(b)(1) or, in the alternative, for judgment on the pleadings pursuant to Rule 12(c).

INTRODUCTION

In this supposed false advertising lawsuit, Plaintiff Summer Sandoval claims

that she was misled into believing that candy did not contain sugar. The allegation is

frivolous and nonsensical in itself, but Plaintiff then goes further to admit in her

complaint that she only purchased the candy after Defendant refused to pay her

lawyer’s extortionate pre-suit demand. Plaintiff has not suffered any cognizable

injury by supposedly buying a product she already believed was mislabeled. She

thus lacks standing, and is unable to establish any of the elements of her claims, e.g.,

reliance, causation and damages.

Defendant YummyEarth is a small Connecticut-based confectionary company

founded by two fathers who wanted to create candy using best-available ingredients.

Plaintiff contends that she bought YummyEarth’s fantastic lollipops because she read

the term “evaporated cane juice” in the ingredients, that this tricked her into

believing that the lollipops somehow did not contain sugar and that, had she known

that the candy contained sugar, she would not have purchased it or would have

somehow paid less for it. Of course, the product listed the correct amount of

“sugars” on its label. Her First Amended Complaint (Dkt. 1-1, “FAC”) alleges that

she bought the candy “this year” (meaning 2017), several months after her lawyers

sent their 2016 demand letter, which they also attached as Exhibit 2 to the FAC.

The claims are frivolous and brought for an improper purpose and should be

dismissed without leave to amend for numerous reasons.

1. There is No Conceivable Injury or Article III Standing. As a

threshold matter, a plaintiff who buys products at the behest of a lawyer to try to

manufacture claims lacks Article III standing because she has not been misled and

has not suffered any injury. E.g., Guttmann v. Nissin Foods, Co., Inc., 2015 WL


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PLEADINGS

4881073, *2 (N.D. Cal. Aug. 14, 2015) (plaintiff who bought product after

previously filing lawsuit making identical allegations about different product could

not have been misled and lacked Art. III standing); Buckland v. Threshold Enters.,

Ltd., 155 Cal. App. 4th 798, 807 (2007) (plaintiff did not suffer injury when she

purchased accused products for purpose of bringing false advertising lawsuit).

Plaintiff separately lacks standing to seek injunctive relief because YummyEarth

stopped using the term “evaporated cane juice” on its own nearly three years ago.

2. The Claims Are Implausible. Equally fundamentally, under Twombly,

a Court must use common sense in evaluating the plausibility of claims. Even if

Plaintiff had not sent YummyEarth a demand letter claiming that the label was

misleading months before her purported purchase, everyone knows that candy

contains sugar. Further, the outdated label that Plaintiff claims she read includes

both “beet sugar” and “syrup” in the ingredient list, and the Nutritional Facts state

“Sugars 17g.” It is implausible that a candy purchaser supposedly worried about

sugar content would ignore the best source of information about sugar content (the

Nutrition Facts, which explicitly list the sugar content) in favor of selectively reading

the ingredient list to seize upon the term “evaporated cane juice.” It is equally

implausible that candy purchasers would pay more for candy they believed lacked its

most essential ingredient – sugar. This is especially true here where the accused

candy is not labeled, advertised or otherwise promoted as sugar-free.

3. This Case Is Part of Plaintiff’s Lawyer’s Track Record of Extorting

Fees. This lawsuit is part of a larger misuse of the court system by Plaintiff’s lawyer

to extort payments from small businesses. Plaintiff’s lawyer is currently the subject

of a RICO suit for, among other things, paying college students to serve as plaintiffs.

(Request for Judicial Notice (“RJN”), Ex. 1.) Plaintiff’s lawyer filed this case after

YummyEarth refused to make a $25,000 payment to his law firm, which Plaintiff’s

lawyer admitted had no correlation to the value of any claim Plaintiff may have or to

the amount of work that he had supposedly done – which was next to nothing, given


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PLEADINGS

that this suit is a verbatim cut and paste of other lawsuits Plaintiff’s lawyer has filed

against other small companies. (RJN, Ex. 2.) Such claims have no legal basis and

should be dismissed.

FACTS

A. YummyEarth’s Candy

Defendant YummyEarth is a small candy company based in Connecticut.

(Declaration of Michael Sands (“Sands Decl.”) ¶ 1.)1 YummyEarth makes, among

other types of candy, lollipops. (Id.) YummyEarth lists the ingredients on its candy

packaging using the terms that are provided by its suppliers. (Id. ¶ 3.) Several years

ago, when one of YummyEarth’s suppliers listed “evaporated cane juice” as an

ingredient, YummyEarth did the same. (Id.) When that supplier changed the

ingredient description to “organic cane sugar,” so did YummyEarth. (Id.)

YummyEarth has used the term “organic cane sugar” rather than “evaporated cane

juice” on its product labels since 2015. (Id. ¶ 4.) It is not clear which version of the

label Plaintiff saw when she purchased the candy, as there have been different

versions over time. (Id.) Each version, however, listed various types of syrup as an

ingredient in the candy. (Id.)

YummyEarth’s product labels have always accurately listed the amount of

sugar contained in the product in the FDA-mandated “Nutrition Facts.” As disclosed

in the Nutrition Facts of the label Plaintiff purportedly saw and relied on, one serving

of the candy contains 17g of sugar. (Id., Ex. 1.) Further, the organic and non-GMO

citric acid used in the product is made from sugar beets rather than genetically

modified corn. (Id. ¶ 7.) The ingredient list also included the term “beet-sugar.”

(Id.)

1 Because this motion seeks relief under Rule 12(b)(1), the Court may consider evidence outside the pleadings. Cal. Trout, Inc. v. U.S. Bureau of Reclamation, 115 F. Supp. 3d 1102, 1108 (C.D. Cal. 2015). Moreover, the label of the product Plaintiff supposedly purchased is incorporated by reference into the FAC. Viggiano v. Hansen Natural Corp., 944 F. Supp. 2d 877, 882 (C.D. Cal. 2013).


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PLEADINGS

B. Procedural History

On October 25, 2016, Plaintiff’s lawyer sent YummyEarth a letter on behalf of

an unnamed “client,” stating that his client had purchased YummyEarth lollipops that

listed evaporated cane sugar as an ingredient and alleging that YummyEarth had

used that term to “mask” that the product contained sugar. (FAC, Ex. 2.)

Upon receipt of the letter, YummyEarth offered the unnamed individual a full

refund for any supposed purchases, pursuant to standard company policy.

(Declaration of Matthew Borden (“Borden Decl.”) ¶ 3.) In response, Plaintiff’s

lawyer demanded a payment of $25,000. (Id. ¶ 4.) When YummyEarth asked how

such an amount was related to any alleged harm suffered by Plaintiff or to any work

done by Plaintiff’s lawyer, Plaintiff’s lawyer did not explain, but merely insisted on a

$25,000 payment. (Id., Ex. 1.)

When YummyEarth refused to pay this extortive amount, Plaintiff’s lawyer

filed a complaint on May 22, 2017, in San Bernardino County Superior Court but did

not serve it or otherwise notify YummyEarth. (Dkt. 1-2.) On July 25, 2017, Plaintiff

filed the FAC in Superior Court and served it on YummyEarth on August 11, 2017.

(Id.) On September 8, 2017, YummyEarth removed the action to this Court.

C. Plaintiff’s Allegations

The Complaint identifies the anonymous Plaintiff in the demand letter as

Summer Sandoval. (FAC ¶ 45.) Plaintiff claims that she bought YummyEarth’s

lollipops “earlier this year [i.e., 2017].” (FAC ¶ 1.) She further alleges that she

“reviewed and relied upon” an outdated label listing evaporated cane juice as an

ingredient in purchasing the candy and claims that, but for the use of the term

“evaporated cane juice,” she “would not have purchased or paid as much for the

product.” (Id.) Plaintiff does not explain, however, what she understood evaporated

cane juice to be, particularly in the context of candy, or how the use of the term

caused her to purchase the lollipops or to somehow pay more for them.


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PLEADINGS

The FAC seeks to assert claims for negligent misrepresentation, and under the

Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code §§ 1750 et seq., and the

Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200 et seq.2

ARGUMENT

The FAC should be dismissed with prejudice pursuant to Rule 12(b)(1),

because Plaintiff lacks standing to bring the claims, and the Court therefore lacks

subject matter jurisdiction. “Pursuant to Rule 12(b)(1) of the Federal Rules of Civil

Procedure, the court must dismiss a complaint when it lacks subject matter

jurisdiction.” Cook v. Harding, 190 F. Supp. 3d 921, 931 (C.D Cal. 2016). When

ruling on a 12(b)(1) motion, “the court is not restricted to the face of the pleadings

and ‘may review any evidence, such as affidavits and testimony, to resolve factual

disputes concerning the existence of jurisdiction.’” California Trout, Inc. v. U.S.

Bureau of Reclamation, 115 F. Supp. 3d 1102, 1108 (C.D. Cal. 2015). Once a

defendant has moved to dismiss for lack of subject matter jurisdiction, the plaintiff

“bears the burden of establishing the court’s jurisdiction” and if the plaintiff “fail[s]

to satisfy every element necessary for subject matter jurisdiction, the Rule 12(b)(1)

motion should be granted.” Cook, 190 F. Supp. 3d at 931, 932 (citing Safe Air for

Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004)).

In the alternative, the Court should enter judgment on the pleadings pursuant

to Rule 12(c), because Plaintiff fails to state a claim. “Rule 12(c) is ‘functionally

identical’ to Rule 12(b)(6)” and therefore “‘the same standard of review’ applies to

motions brought under either rule.” Cafasso v. General Dynamics C4 Sys., Inc., 637

F. 3d 1047, 1054 n.4 (9th Cir. 2011) (quoting Dworkin v. Hustler Magazine Inc., 867

2 Plaintiff also asserts claims under the False Advertising Law (“FAL”), Cal. Bus. & Prof. Code §§ 17500 et seq. The requirements of the FAL, however, are identical to those of the UCL. Victor v. R.C. Bigelow, Inc., No. 13-cv-02976-WHO, 2014 WL 12642194, at *6 (N.D. Cal. July 18, 2014) (“the requirements for stating a claim under the CLRA and FAL are essentially identical to those for stating a claim under the “fraudulent” prong of the UCL”).


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PLEADINGS

F.2d 1188, 1192 (9th Cir.1989)). “As with a Rule 12(b) motion to dismiss, a Rule

12(c) motion should be granted if the plaintiff fails to proffer ‘enough facts to state a

claim to relief that is plausible on its face.’” Independent Living Ctr. of S. Cal. v.

City of Los Angeles, 205 F. Supp. 3d 1105, 1109 (C.D. Cal. 2016) (quoting Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 570 (2007)). To meet the plausibility standard, a

plaintiff must plead “factual content that allows the court to draw the reasonable

inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,

556 U.S. 662, 678 (2009).

I. PLAINTIFF LACKS STANDING TO BRING THE CLAIMS

Federal courts have limited jurisdiction. They exist for people who are

actually injured and need the judicial power of the United States to help them.

Where, as here, a party’s lawyer has tried to manufacture an injury for purposes of

contriving litigation, the plaintiff lacks standing under Article III, the FAL, the UCL,

and the CLRA, and her claims must therefore be dismissed.

To satisfy the requirements of Article III standing, Plaintiff must allege: (1)

“an injury in fact” that is both “concrete and particularized” and “actual or

imminent”; (2) that the injury is “fairly traceable to the challenged action of the

defendant”; and (3) that it is “likely, as opposed to merely speculative, that the injury

will be redressed by a favorable decision.” Lujan v. Defenders of Wildlife, 504 U.S.

555, 560 (1992).

Plaintiff lacks standing under Article III because she has not suffered any

injury in fact or the loss of money or property, and she has not and cannot

demonstrate actual reliance on Defendant’s alleged misrepresentations. She lacks

standing to seek injunctive relief because the labels were already changed before she

threatened suit and because she faces no danger of future harm. Accordingly, the

Court lacks subject matter jurisdiction over Plaintiff’s claims, and they must be

dismissed.


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PLEADINGS

A. Plaintiff Has Not Suffered Any Injury

Plaintiff’s lawyer sent a demand letter to YummyEarth in October 2016 stating

that Plaintiff had been misled by the use of the term “evaporated cane juice.” (FAC,

Ex. 2.) Plaintiff admits, however, that she did not purchase the lollipops until

“earlier this year,” i.e., in 2017, months after the demand letter was sent. (FAC ¶ 1.)

The timing of Plaintiff’s demand letter and her alleged purchase of the candy

indicates that she only could have purchased the candy with the intention of bringing

litigation against YummyEarth. But when a plaintiff purchases a product with the

purpose of pursuing litigation, she does not suffer an injury in fact, and the money

spent to purchase the product does not constitute “lost” money or property.

Buckland v. Threshold Enters. Ltd., 155 Cal.App.4th 798, 816, 818 (2007).

In Buckland, the plaintiff brought claims for negligent misrepresentation and

violation of the UCL and CLRA against the makers of various lotions and skin

creams, alleging that the products’ packaging and marketing materials contained

false and misleading statements. The plaintiff conceded that she had purchased the

products with the intent to pursue litigation against the manufacturers. The Court of

Appeals held that because “Buckland purchased the product to establish standing for

litigation” and “the costs were incurred solely to facilitate her litigation,” her

purchase of the products “does not constitute the requisite injury in fact; to hold

otherwise would gut the injury in fact requirement.” Id. at 816. Likewise, the Court

held that when a plaintiff purchases a product in order to create standing to bring a

lawsuit, the plaintiff has not suffered the necessary “loss of money or property.” Id.

at 818. As noted in Buckland, California voters passed Proposition 64 to add the

injury requirement to the UCL to prevent just this sort of litigation abuse. Id. at 812

(“In approving Proposition 64, the voters found and declared that the amendments

were necessary to prevent abusive UCL actions by attorneys whose clients had not

been ‘injured in fact’ or used the defendant’s product or service.”). For the reasons

explained in Buckland, Plaintiff has not suffered any injury here because she


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PLEADINGS

allegedly bought YummyEarth’s lollipops after sending a demand letter claiming the

lollipops were mislabeled.

Other decisions likewise hold that a plaintiff who buys a product for purposes

of bringing litigation has not suffered any cognizable injury. In Guttmann v. Nissin

Foods, Co., Inc., 2015 WL 4881073, at *2 (N.D. Cal. Aug. 14, 2015), the Court

dismissed UCL claims by a plaintiff for lack of standing because he previously had

filed a lawsuit alleging that he was misled by the same term over which he was now

suing. The Court explained that the plaintiff “is not a typical consumer but is a self-

appointed inspector general roving the aisles of our supermarkets. He continues on a

five-year litigation campaign against artificial trans-fat and partially hydrogenated oil

and has admitted that he has inspected products for those ingredients before.” Id. at

*3. The same is true here. Just as Guttman had previously complained about the

term “0 g trans-fat” before filing suit over the same term, Plaintiff admits that she

sent a demand letter complaining about the term “evaporated cane juice” before

buying the product and then filing suit here.

Buckland and Guttman foreclose Plaintiff’s claims and stand for the obvious

proposition that a plaintiff cannot manufacture federal jurisdiction by buying a

product she already believes is mislabeled. See also Goldsmith v. Allergan, Inc., No.

No. 09-cv-7088 PSG (Ex), 2010 WL 11463860, at *4 (C.D. Cal. Sept. 14, 2010)

(dismissing claims because after receiving letter from Nevada State Medical Board

informing plaintiff that a single vial of Botox was not to be used multiple times,

“[p]laintiff could no longer rely on the alleged misrepresentations of Defendant, and

his decision to continue to purchase Botox was that of a volunteer, done without

mistake, coercion or request”); Starbucks Corp. v. Superior Court, 168 Cal. App. 4th

1436, 1447, (2008) (“[t]here are practical reasons why [plaintiffs’] actual

understanding is critical. Without it, there would be nothing to stop them from freely

roaming throughout the state as knights errant amici searching for deficiencies ...

where no harm has been caused them or anyone else as a result....”).


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PLEADINGS

Indeed, this action is part of Plaintiff’s lawyer’s history of engaging in the sort

of abusive litigation that Proposition 64 was intended to prevent. Plaintiff’s lawyer

is currently a defendant in a RICO action in this District, which alleges that he and

his brother engaged in fraud and malicious prosecution by, among other things: (1)

paying college students to serve as plaintiffs; (2) submitting knowingly false

affidavits from these “plaintiffs”; and (3) filing false pleadings. (RJN, Ex. 1.)

Though Plaintiff’s lawyer has changed the name of his firm, he has continued

to engage in abusive litigation practices. As stated above, Plaintiff’s lawyer

demanded a payment of $25,000 from YummyEarth in order to refrain from filing

this suit, but could not explain why Plaintiff’s claim was worth that amount or what

sort of work he had done in order to justify that amount. This would be impossible,

as the FAC is nothing more than a carbon copy of other complaints Plaintiff’s lawyer

has filed against small businesses that refuse to pay a tribute. See, e.g., Garcia v.

Hillside Candy, LLC, Case no 5:16-cv-02231-CJC-DTB (C.D. Cal.) and Garcia v.

Rebbl Inc., Case no. 30-2016-00876919-CU-MT-CXC (Superior Court of California,

Orange County); (RJN, Exs. 3 & 4).

Here, as in Guttman, Buckland, and the decisions cited above, Plaintiff

purchased the product in order to pursue litigation; the timing of the demand letter

and her alleged purchase of the product allows for no other conclusion. This is

doubly true given Plaintiff’s lawyer’s history of engaging in such abuse. Plaintiff

thus has suffered no injury in fact. She lacks standing, and the Court should dismiss

her claims for lack of subject matter jurisdiction.

B. Plaintiff Lacks Standing for Injunctive Relief

Plaintiff seeks relief including an injunction ordering “defendant to cease and

desist from engaging in the unfair, unlawful and/or fraudulent practices alleged in the

complaint.” To establish standing to seek injunctive relief, a plaintiff must

demonstrate “a real and immediate threat of repeated injury.” Bates v. United Parcel


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Serv., Inc., 511 F.3d 974, 985 (9th Cir. 2007). Plaintiff cannot establish any such

threat, and her request for an injunction must therefore be denied.

First, any claim for injunctive relief is moot because YummyEarth changed the

labeling of its products, replacing the term “evaporated cane juice” with “cane sugar”

years ago. Indeed, Defendant made this change to its product labels on its own, long

before receiving Plaintiff’s demand letter and thus her claims for injunctive relief

should be dismissed. See Figy v. Frito-Lay N. Am. Inc., 67 F. Supp. 3d 1075, 1085

(N.D. Cal. 2014) (dismissing claims for injunctive relief because “[d]efendant has

furnished two declarations showing the current labeling for the Products and

specifically stating that the allegedly offending labels were no longer being printed

when Plaintiffs filed their complaint”); Nguyen v. Medora, No. 14-cv-00618, 2015

WL 4932836, at *8 (N.D. Cal. Aug. 18, 2015) (“even if Plaintiffs did offer evidence

of injury-in-fact and redressability, they still lack standing to pursue injunctive relief

because Medora changed the packaging back in December 2013, before this suit was

even filed”). Similarly, here, YummyEarth changed its labels years before getting

Plaintiff’s demand letter. (Sands Decl. ¶ 3.)

Additionally, based on her own allegations, Plaintiff now knows that

evaporated cane juice is sugar and therefore would not purchase the lollipops again.

See Romero, 2015 WL 2125004, at *7 (“Now that Plaintiff is aware that Defendant’s

bread contains undesirable chemicals and processed wheat…there is no likelihood

that Plaintiff will purchase Defendant’s products again.”). Though the Ninth Circuit

recently held that a “previously deceived” plaintiff may have standing to seek an

injunction in certain circumstances, Davidson v. Kimberly-Clark Corp., 873 F.3d

1103, 1115 (9th Cir. 2017), its reasoning does not apply here. In Davidson, the

Court articulated two ways a plaintiff who is previously deceived can plausibly

allege a threat of future injury. First, the plaintiff could allege that she desires to

purchase the product again in the future but is unable to rely on the product’s

advertising or labeling. Second, the plaintiff could allege that she might purchase the


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product in the future despite the past false advertising or labeling because she could

reasonably, but incorrectly, assume the product was improved.

In Davidson, the court found that the plaintiff, who alleged that the

defendant’s wipes were falsely labeled as “flushable,” did face an imminent or actual

threat of future harm because (1) she alleged that she wished to purchase the product

again, and (2) without an injunction, she would have no way of knowing in the future

whether the representation that the product was “flushable” was true. Id. at 1116.

Here, there is no threat of future injury because Plaintiff has not alleged that she

wishes to purchase the lollipops again – to the contrary, she has made it clear that she

will not. (FAC ¶ 1.) Further, unlike in Davidson, which was a case where the

product label and advertising allegedly did not conform to the actual product, here

Plaintiff now knows that evaporated cane juice is sugar, and there is therefore no

possibility that Plaintiff will again be misled by the use of the term. An injunction is

thus unnecessary to prevent future harm in this case. See Gasser v. Kiss My Face,

LLC, No 17-cv-01675, 2017 WL 4773426, *4 (N.D. Cal. Oct. 23, 2017) (“[T]his

Court cannot force KMF to change the composition of its products. Instead, the

injunctive relief is limited to having the label accurately reflect the product’s

contents.”) (internal quotation omitted). Because Plaintiff has shown in her pleadings

“that she won’t be fooled again” by Defendant’s use of the term evaporated cane

juice, she “has not, nor can she, establish ‘a real and immediate threat of repeated

injury.’” Id. (quoting Bates v. United Parcel Serv., Inc., 511 F.3d 974, 985 (9th Cir.

2007)).

II. PLAINTIFF’S CLAIMS ARE IMPLAUSIBLE

Even if the Court were to have subject matter jurisdiction, the Court should

enter judgment on the pleadings, as Plaintiff fails to state a claim.

For each of the causes of action she attempts to assert, Plaintiff must show that

she was misled, that she relied on the alleged misleading statement, and that she

suffered harm as a result of the supposed misrepresentation. The CLRA, FAL, and


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UCL require Plaintiff to demonstrate that she has suffered a cognizable injury. Cal.

Bus. & Prof. Code § 17204 (UCL claim only may be brought “by a person who has

suffered injury in fact and has lost money or property as a result of the unfair

competition”); Cal. Civ. Code § 1780(a) (CLRA claim may be brought only by a

consumer “who suffers… damage as a result of the use or employment” of a

proscribed method, act, or practice). To state a claim, a plaintiff must prove (1)

reliance on the defendant’s alleged misrepresentations, and (2) economic injury

suffered as a result of the reliance. See, e.g., Kane v. Chobani, Inc., 973 F. Supp. 2d

1120, 1129 (N.D. Cal. 2014), vacated on other grounds, 645 Fed. Appx. 593 (9th

Cir. 2016) (FAL and CLRA require allegations of reliance and economic injury);

Durell v. Sharp Healthcare, 183 Cal. App. 4th 1350, 1367 (2010) (dismissing CLRA

claim where plaintiff failed to allege facts showing that he “relied on any

representation by” defendant); In re Tobacco II Cases, 46 Cal. 4th 298, 326 (2009)

(plaintiff must allege actual reliance under UCL fraud prong); Kwikset Corp. v.

Superior Ct., 51 Cal. 4th 310, 326 (2011) (plaintiff must allege actual reliance for

claims under UCL unlawful prong that are grounded in fraud); Romero v. Flowers

Bakeries, LLC, No. 14-cv-05189 BLF, 2015 WL 2125004, at *4 (N.D. Cal. May 6,

2015) (“Actual reliance is a required element of standing to pursue claims under the

California consumer protection statutes that Plaintiff invokes.”).

Plaintiff has not plausibly alleged any of these elements.

A. Plaintiff Has Not Plausibly Alleged that She Was Misled

Plaintiff’s allegation that she was misled by the use of the term “evaporated

cane juice” into believing that the candy she purchased “contain[ed] something other

than sugar” and that she somehow suffered some type of economic loss as a result

fails to meet the plausibility requirement of Twombly and Iqbal. “[D]etermining

whether a complaint states a plausible claim is context specific, requiring the

reviewing court to draw on its experience and common sense.” Iqbal, 556 U.S. at

679 (citing Twombly, 550 U.S. at 556). Here, Plaintiff claims that she bought the


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lollipops after sending her demand letter. Under Buckland, that is dispositive of all

her claims.

Equally fundamentally, Plaintiff’s core allegation in this case is that she was

deceived into believing that candy did not have sugar in it. That is like a person

claiming that she was deceived into believing that a hamburger did not contain meat,

or that a milkshake did not contain milk. It simply defies basic sensibility. Common

sense indicates that candy contains sugar. Common sense indicates that, if a person

were concerned about the sugar content of a product, she would not ignore express

representations on the product packaging regarding its sugar content or disregard the

ingredient list, which includes both “syrup” and “beet sugar.” Common sense

dictates that, especially with respect to candy, sugar free products are expressly

labeled “sugar free.” Plaintiff’s claim that she purchased candy under the belief that

it did not contain sugar is thus implausible on its face – even if Plaintiff did not admit

in her pleadings that she had sent a demand letter before supposedly buying the

candy. Courts routinely dismiss facially implausible claims such as this. See e.g.,

Pelayo v. Nestle USA, Inc., No. 13-cv-5213-JFW (AJWx), 989 F. Supp. 2d 973, 978

(C.D. Cal. 2013) (dismissing claims regarding “all natural” pasta in part because “the

reasonable consumer is aware that Buitoni Pastas are not ‘springing fully-formed

from Ravioli trees and Tortellini bushes.’”); Red v. Kraft Foods, Inc., No. 10-cv-

1028-GW(AGRx), 2012 WL 5504011, at *3 (C.D. Cal. Oct. 25, 2012) (dismissing

claims regarding “Vegetable Thins” crackers because “the fact remains that the

product is a box of crackers, and a reasonable consumer will be familiar with the fact

of life that a cracker is not composed of primarily fresh vegetables.”); Williamson v.

Apple, Inc., 2012 WL 3835104, at *6 (N.D. Cal. Sept. 4, 2012) (dismissing claims

regarding iPhone glass case because “it is a well-known fact of life that glass can

break under impact, even glass that has been reinforced. This much is known to the

ordinary, reasonable consumer.”); Werbel v. Pepsico, Inc., 2010 WL 2673860, at *3-

5 (N.D. Cal. July 2, 2010) (dismissing claims regarding “Cap’n Crunch’s Crunch


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Berries” because no reasonable consumer could “believe that the brightly-colored

cereal balls depicted on the product cover and described as Crunch Berries are, in

fact, made or derived from real berries or fruit”); McKinnis v. Kellogg USA, No. 07-

cv-2611-ABC (RCx), 2007 WL 4766060, at *3-5 (C.D. Cal. Sept. 19, 2007)

(dismissing claims regarding “Froot Loops” cereal because “a reasonable consumer,

even on the most cursory review of the Froot Loops box, could not, as a matter of

law, be misled into believing that the cereal contains actual fruit”). Plaintiff’s claims

that she was shocked to learn that YummyEarth’s candy contained sugar are equally

implausible, especially given the product’s actual labeling.

B. Plaintiff Has Not Plausibly Alleged Reliance

Separately, Plaintiff has not and cannot demonstrate actual reliance on

Defendant’s alleged misrepresentations. Indeed, the factual record demonstrates that

Plaintiff was aware that evaporated cane juice was sugar at the time she purchased

the product. As stated above, Plaintiff alleges that she purchased the product after

her counsel sent the demand letter to YummyEarth, at which point she already knew

that evaporated cane juice was sugar. Where, as here, a plaintiff is already aware of

the allegedly deceptive practice that she claims is misleading at the time she

purchases the product, she cannot demonstrate actual reliance. Stathakos v.

Columbia Sportswear Co., No. 15-cv-04543-YGR, 2017 WL 1957063, at *8 (N.D.

Cal. May 11, 2017) (dismissing UCL, FAL, and CLRA claims with respect to items

plaintiffs purchased after complaint had been filed since “plaintiffs would have had

notice of the allegedly deceptive practice” and therefore “could not have actually

relied” on the allegedly misleading statements). Reliance only occurs “when the

plaintiff reposes confidence in the truth of the relevant representation, and acts upon

this confidence.” Buckland, 155 Cal. App. 4th at 808. Since Plaintiff knew that

evaporated cane juice was sugar at the time she purchased the product, she could no

longer have “confidence in the truth of the relevant representation” – i.e., that

evaporated cane juice was “something other than sugar” – and thus she did not rely


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on this alleged misrepresentation. Id.

C. The Accused Labels Expressly State that the Product Contains

Sugar

YummyEarth’s express listing of the sugar content on the label of its products

is a separate and independent reason why Plaintiff fails to state a claim.

The label on the candy purchased by Plaintiff does not, as Plaintiff alleges,

“mask” the fact that the product contains sugar. To the contrary, the label

conspicuously discloses the sugar content in the Nutrition Facts. Plaintiff’s claim

that she reviewed the ingredient list of the product and did not know that it contained

sugar is thus “contradicted by the fact that [she] nonetheless purchased the products

despite the fact that the sugar content is listed right next to the ingredient list.”

Morgan v. Wallaby Yogurt Co., Inc., No. 13-cv-00296 WHO, 2013 WL 5514563, at

*8 (N.D. Cal. Oct. 4, 2013).

Further, the outdated product label Plaintiff alleges she read includes both

“syrup” and “beet sugar” as ingredients. The FAC demonstrates that Plaintiff

understood “syrup” to mean “sugar.” (FAC ¶ 17 (“Sugar cane products must be

described by their usual or common name, sugar or cane syrup.”).) As Plaintiff knew

that “syrup” was a type of sugar, her claim that the term “evaporated cane juice” led

her to believe that the product contained “something other than sugar” is not

plausible. See Kane, 973 F. Supp. 2d at 1133. Plaintiff knew that the product

contained sugar, and her “selective interpretation of individual words or phrases from

[the] product’s labeling cannot support a CLRA, FAL, or UCL claim.” Hairston v.

S. Beach Beverage Co., No. 12-cv-1429 JFW, 2012 WL 1893818, at *4 (C.D. Cal.

May 18, 2012).

D. Plaintiff Has Not Plausibly Pleaded Any Injury

Plaintiff conclusorily alleges that she somehow “would not have…paid as

much” for YummyEarth’s lollipops had she known they contained sugar. (FAC ¶ 1.)

A single purchaser’s predilections and beliefs, however, cannot drive the price of


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goods. Rather, for a business to charge a premium based on a specific product

attribute, such as the product being sugar free, numerous consumers would have to

be willing to pay more for that attribute. See In re ConAgra, 90 F. Supp. 3d 919, 989

(C.D. Cal.) (price premium requires consumers to “pay more for each [product] they

purchased” based on the alleged deception).

Here, it is implausible that numerous candy consumers would be willing to

pay more for candy that they believed lacked its best ingredient. If anything, most

consumers would value such a product less. Moreover, there is no allegation that

YummyEarth labels, advertises or promotes its lollipops as sugar-free, much less

does so in a way so central to its branding that consumers would be willing to pay a

“premium” for this feature. This is a separate and independent reason why Plaintiff

has not alleged and cannot establish any loss of money or property.

III. PLAINTIFF’S CLAIMS ARE NOT PLED WITH PARTICULARITY

Claims sounding in fraud are subject to the heightened pleading standard of

Rule 9(b), which requires plaintiffs to “state with particularity the circumstances

constituting fraud or mistake.” To satisfy this requirement, Plaintiff must allege the

“who, what, when, where, and how of the misconduct charged.” Ebeid ex rel. U.S. v.

Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010).

All of Plaintiff’s claims sound in fraud. See Romero, 2015 WL 2125004, at *3

(holding that mislabeling claims including those under the UCL, FAL, and CLRA

and for negligent misrepresentation, were based in fraud). Plaintiff fails, however, to

allege the “who, what, when, where and how” of her claims. She does not

specifically allege where or when she purchased the candy, only that she bought it

“earlier this year,” somewhere “in San Bernardino County.” She alleges that the use

of the term “evaporated cane juice” was misleading, but she does not allege what she

interpreted the term to mean, or how it induced her to purchase the product. Id. at

*4. Because Plaintiff fails to meet the heightened pleading standards of Rule 9(b),

her claims must be dismissed on this ground as well.


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CONCLUSION

For the foregoing reasons, Defendant respectfully requests the Court to

dismiss the First Amended Complaint with prejudice for lack of subject matter

jurisdiction or, in the alternative, enter judgment on the pleadings.

Dated: November 17, 2017 Respectfully Submitted,

BRAUNHAGEY & BORDEN LLP

By: _/s/ Matthew Borden___

Matthew Borden

Attorneys for Defendant YummyEarth Inc.


Documents

BRAUNHAGEY BORDEN LLP San Francisco, CA 94104 Telephone ... · Date: December 18, 2017 Time: UNDER SUBMISSION Matthew Borden, Esq. (SBN: 214323) [email protected] Amit Rana, Esq